Q1. Using AD-AS framework, graphically show the effect of an increase in foreign income on Real GDP and Price level.

Q2. Using graphs, show how each of the following will affect Real GDP and Price Level in the short-run:

a) An increase in wage rates

b) An increase in productivity of labour

c) An increase in expected interest rate

d) An increase in government spending

Q3. Using graphs, show how each of the following will affect Real GDP and Price Level in the short-run:

a) An increase in taxes

b) An increase in rent on land

c) A decrease in expected profit

d) A decrease in the labor force

e) A decrease in arable land